India Sailing Between Iran And USA

 “We look to the government of Pakistan to do more…It needs to make sure that its territory is not used as a launching pad for terrorist attacks anywhere.” Hillary Clinton could not have made a better statement aimed at appealing to the general Indian public at the beginning of her trip.  For some years now, the US Government’s once-solid relationship with Islamabad has begun to cool, and while ties with Delhi are becoming ever more friendly, a longtime anti-American sentiment is still palpable in India and will be difficult to eradicate.

This attitude can be seen in the slow progress of the security and nuclear talks that began under George W. Bush, the obstacles that US giants of distribution still face to enter the promising Indian retail market, and the oscillating flow of trade. After years at the top of the list, the US has now fallen to the 3rd spot in the rankings of trade and commerce with India, behind China and the United Arab Emirates.
Like the US-China Strategic and Economic Dialogue held in Beijing the week before, obscured in the media by the Chen Guangcheng incident, another unfortunate coincidence in the timing of the US Secretary of State’s Asian tour led the media focus elsewhere. In India, it was the ambivalent reaction to the Secretary of State’s request to reduce the purchases of Iranian oil. Officially, the request was given the best diplomatic attention. India really is trying to reduce its oil imports from Teheran, with some success. At the same time, however, the Indian government is fiercely negotiating with the Obama administration to be granted an exemption from indirect sanctions applied in the case of repeat customers of Iranian crude, the same exemptions granted to 10 European countries and Japan. An important concession, since India is the second biggest importer of Iranian oil after China, with 300,000 barrels per day.
While negotiations were under way in the Indian capital, an important Iranian business delegation was holding a different kind of meeting with Indian entrepreneurs in Mumbai. Officials on both sides were discussing ways to pay for oil purchases with Indian rupees, rather than US dollars. In an attempt at convincing the US that Indian funds would not be financing the Iranian nuclear program, the negotiations resulted in an agreement whereby India would pay for 45% of the oil supply in rupees, which would then be used to purchase and import Indian goods back to Iran.
The payment agreement was likely the best the US could have hoped for in its intervention between India and Iran. S.M. Krishna, Indian Minister of Foreign Affairs, remarked that “It is natural for us to try and diversify our imports of oil and gas to meet the objective of energy security,” underscoring the historical bond between India and Iran, an antique tradition of social and cultural exchange across Central Asia that simply cannot be sanctioned.

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